A plea for adoption of ethical compliance. Avoiding pitfalls of compliance groupthink and consulting

Author:Wendy Mason Burdon, Jackie Harvey
Position:Accounting and Finance, Newcastle Business School, University of Northumbria, Newcastle Upon Tyne, United Kingdom; Accounting and Finance, Newcastle Business School, University of Northumbria, Newcastle Upon Tyne, United Kingdom
Pages:187-200
SUMMARY

Purpose - This paper aims to discuss the evolution of regulation and compliance in the past 20 years, to the current state of affairs. Despite earlier calls for ethical compliance within financial institutions, there remains scope for improvement within practice (as evidenced by on-going regulatory issues in the banking sector). Design/methodology/approach... (see full summary)

 
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A plea for adoption of ethical
compliance
Avoiding pitfalls of compliance groupthink
and consulting
Wendy Mason Burdon and Jackie Harvey
Accounting and Finance, Newcastle Business School,
University of Northumbria, Newcastle Upon Tyne, UK
Abstract
Purpose – This paper aims to discuss the evolution of regulation and compliance in the past 20 years,
to the current state of affairs. Despite earlier calls for ethical compliance within nancial institutions,
there remains scope for improvement within practice (as evidenced by on-going regulatory issues in the
banking sector).
Design/methodology/approach Pre-crisis academic models of regulation and compliance are
reviewed for evidence of use in practice. Some preliminary inductive research evidence is presented,
following data collection via interviews with individuals impacted by compliance in nancial service
organisations. The interview data, facilitated by repertory grid, provide a post-crisis assessment of the
issues faced by practitioners to comply with a new regulation.
Findings An over-reliance on group think and consulting services in compliance approach is
potentially holding back progress in compliance service. Due to the limited recent empirical data offered
in the literature, we believe further research into this area should be undertaken.
Originality/value – This piece of research will provoke reection on current practice vs existing
academic theories, and seeks to identify whether alternative models are viable for the future of
compliance approaches within practice.
Keywords Compliance, Financial service regulation
Paper type Conceptual paper
1. Introduction and context
There is limited evidence of public trust in the nancial markets, following the
2008-2009 nancial crisis and ongoing scandals within the media (mis-selling, interest
rate rigging and continued fat cat bonuses[1]). Recent proposals by Sir Richard Lambert
call for an independent body acting as a “champion for better banking standards” (BBC,
2014) and suggests a lack of condence in the current regulatory bodies. However, is the
emphasis on new regulation and supervision standards the way to restore public trust?
If policy reform really is the solution, how should the banks approach the incoming
waves of new regulation? Two alternate visions of rms exist: rst, of the rm as a
rational prot maximiser, obeying laws and regulations but only when it is in their best
economic interest; and second, where the rm is a law-abiding actor that complies in
good faith despite struggling with increasingly complicated and contradictory laws and
The authors would like to thank colleagues who read and commented upon earlier versions of this
paper. All errors and omissions remain those of the authors.
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1359-0790.htm
Plea for
adoption of
ethical
compliance
187
Journalof Financial Crime
Vol.23 No. 1, 2016
pp.187-200
©Emerald Group Publishing Limited
1359-0790
DOI 10.1108/JFC-11-2014-0049

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